The Elan Valley reservoirs cost �6m to build

The Elan Valley, near Rhayader, was flooded 101 years ago to provide the city with clean water.

To reflect this link, Community Arts Rhayader And District (Carad) asked for a donation towards the cost of the �550,000 museum.

But Birmingham Council said it would provide no benefits to its people.

Carad accused the city council of failing to grasp the significance of the Elan Valley.

Its six reservoirs send 360m gallons of water a day along a 70-mile pipeline to Birmingham and also to parts of south Powys and south Wales.

ELAN VALLEY FACTS Work started on the reservoirs in 1893 50,000 people were involved More than 100 workers died The reservoirs cost �6m to build More than 100 people had to desert their homes in the valley

The valley's residents, whose homes were flooded to make way for the water, were not paid compensation.

Carad chairman Peter Cox said: "We thought they (the city council) underestimated the significance of our approach and in a way underestimated people's feelings and the feelings of those who lost their homes in the valley.

"I have written back to the city council giving some historical perspective. The letter also contains 101 signatures from people in the town.

"The people were very disappointed by the council's decision because they felt it did not reflect the majority of people's feelings in Birmingham."

Work started on the reservoirs in 1893

In a letter to Mr Cox saying he was unable to help, the council's leader Mike Whitby provided a list of other groups and organisations in the city who could assist.

A spokeswoman for Birmingham City Council said: "The city council is unable to make a direct donation because of the limited direct benefit to Birmingham people and therefore the restrictions on our legal powers."

The museum plans to highlight the social and economic impact of the development of the Elan Valley reservoirs to supply water to Birmingham.